Friday, June 19, 2009

Identify and Compare The Revenue Model for Google, Amazon.com and eBay

Google are making profits from its multi services such as function of AdWords that allow advertiser to present advertisement to the people, advertising fees, Google Adsense where it allows users to earn money quick and easy by placing ads on their web sites. The solution is based on the pay per click procedure because it automatically transfers a certain amount of money into the owner's account every time a user clicks on the advertisement. Google's revenue jumps to $5.70 Billion in the forth quarter of 2008.


Google is among the essential tools or equipment we use when we surf the Internet. Google acquire some of the major player in the online industry like YouTube the leader of online video server and Google are making profit out of it. Google keeps on expanding their services like providing Google Maps, Google News and several other services like Blogger where it is the blog service developed to help users post and comment articles wrote by numerous authors.

Meanwhile, eBay Inc. is the world’s largest online marketplace where people can actually sell anything that they can think of. One of the principle sources of eBay’s revenue is the fees it charges to sellers for listing their items on the site for auction and it is called the insertion fee where it is based on the starting price of the item and its category. Besides that, eBay also charges for upgraded listing features, such as additional picture and higher ranking in search results.

But that is not the end of the story, the largest chunk of eBay’s revenue comes from taking a percentage of the final value of each successfully auctioned item. In other word, the higher the closing price of a sold item the more eBay will get from the percentage of the value sold. Other than that, eBay acquired Skype, the world’s fastest-growing internet communication company, where it generates revenue through its premium offering such as call that uses its own software from landline to mobile phones, voicemail, call forwarding, ringtones and other offerings.

On the other hand, it is different kind of revenue model for Amazon.com. It transformed itself from a specialty retailer of selling books into an online shopping portal which set itself up as a mediator between buyer and seller. It started selling products from companies such as Toys “R” Us, Target and many other companies on its web site. Besides that, Amazon.com continues to offer discounts on merchandise, offering consumers personalised daily deals on everything from kitchenware to computer hardware and also for customers who spend more than $25 on Amazon.com qualify for free shipping and this attracts people to buy from Amazon.com.

In 2003, Amazon unveils a new technology called “Search Inside the Book” that allows consumers to preview text of 120 000 books before deciding wanted to buy or not. Amazon lets customers submit their feedback of the books and other product so that they can share their thoughts with other users. Moreover, Amazon launched zShops services where it charges merchant a monthly fee to sell their products or item on the web site. A merchant who sell their products through zShops pay Amazon a monthly fee of $39.99 and a closing fee of 5% on items sold for $25 or less.

References:

Thursday, June 18, 2009

The History and Evolution of E-commerce

History of E-commerce

E-commerce is the acronym that stands for Electronic Commerce in general. It is the practice of buying, selling and marketing of goods or services over an electronic medium. The meaning of electronic commerce has changed over the last 30 years. Originally, electronic commerce meant the facilitation of commercial transactions electronically, using technology such as Electronic Data Interchange (EDI) and Electronic Funds Transfer (EFT).

In the early days, e-commerce was conducted over private networks called Value Added Networks (or VANs) in the form of Electronic Data Interchange (EDI). EDI was basically limited to being used as a form to pass information between two or more companies. Two companies needed to subscribe to the same VAN, the format of messages that could be sent was heavily regulated, and the exchange of money took place outside of the VAN/EDI arena.

E-commerce was introduced in the late 1970s, allowing businesses to send commercial documents like purchase orders or invoices electronically. The growth and acceptance of credit cards, automated teller machines (ATM) and telephone banking in the 1980s were also forms of e-commerce. Besides that, Online shopping was invented in the UK in 1979 by Michael Aldrich and during the 1980s it was used extensively particularly by auto manufacturers such as Ford, Peugeot-Talbot, General Motors and Nissan. From the 1990s onwards, e-commerce would additionally include enterprise resource planning systems (ERP), data mining and data warehousing.

The evolution of e-commerce as following:



The Early Adopter of E-commerce
There is some example of the early adopter of e-commerce which has spent millions in trying to draw online shoppers through their virtual doors. The first early adopter of e-commerce technology that was founded in Malaysia is Pizza Hut. Meanwhile, the other examples of early adopter which founded internationally are Amazon and eBay. Both of them was founded in 1994 and launched in 1995.

What is Web 2.0?
Web 2.0 refers to a second generation of web development and design that facilitates communication, secure information sharing, interoperability, and collaboration on the World Wide Web. Web 2.0 concepts have led to the development and evolution of web-based communities, hosted services, and applications such as social-networking sites, video-sharing sites, wikis, blogs, and etc.

Web 2.0 websites typically include some of the following features/techniques:


References:
  1. http://www.ecommerce-journal.com/articles/electronic_commerce_aka_e_commerce_history
  2. http://en.wikipedia.org/wiki/E-commerce
  3. http://www.redorbit.com/news/technology/534895/channeladvisor_receives_ebay_star_developer_award_awarded_ebay_early_adopter/index.html
  4. http://en.wikipedia.org/wiki/Amazon.com
  5. http://en.wikipedia.org/wiki/Ebay
  6. http://blogs.zdnet.com/web2explorer/?p=5

An example of an E-commerce failure and its causes

E-commerce is a growing rapidly industry in recent years. There are a lot of successful E-commerce companies such as e-Bay, Amazon, Yahoo and Google. But there are also have failure E-commerce companies such as Pets.com, Boo.com, Go.com Webvan.com and etc.


Boo.com was a United Kingdom internet company founded by Swedes Ernst Malmsten, Kajsa Leander and Patrik Hedelin. Moreover, Boo.com launched in the year of 1999 to sell branded fashion apparel through the Internet. Besides that, Boo.com Company spent a huge capital ($135 million) into the business, and later it ran into liquidity in the May 2000.

The reasons of Boo.com failures are problem with the user experience and mismanagement from the start. Moreover, Boo.com had a poorly designed interface for its target audience. Besides that, Boo.com website was complicated and not user friendly which relied heavily on JavaScript and Flash technology. As a result, it is very slow to load at the time when dial-up internet usage was a norm. Meanwhile, Boo.com required the site to be displayed in a fixed size window, which limited the space available to display product information to the customer.

Poor management lead to Boo.com spent a lot of cash to market itself as a global company but then had to deal with different languages, pricing, and tax structures in all the countries it served. Furthermore, Boo.com was recruited large number of staff and contractors with lack of direction and executive decision about how many and what were required by Boo.com. Other than that, the most important cause is Boo.com sales did not match expectations; it is due partly to the very high number of products returned by customers. Consequently, Boo.com placed into liquidated in the May 2000.



References:
3. http://www.guardian.co.uk/technology/2005/may/16/media.business

Wednesday, June 17, 2009

An Example of an E-Commerce Success and its Causes

Jeff Bezos founded Amazon.com, Inc. in 1994 and launched it online in 1995. It started as an on-line bookstore but soon diversified to product lines of VHS, DVD, music CDs and MP3s, computer software, video games, electronics, apparel, furniture, food, toys, etc. Amazon has established separate websites in Canada, the United Kingdom, Germany, France, China, and Japan. It also provides international shipping to certain countries for some of its products.

On January 15, 2009, a survey published by Verdict Research found that Amazon was the UK's favorite music and video retailer, and came third in overall retail rankings. The domain amazon.com attracted at least 615 million visitors annually by 2008 according to a Compete.com survey.

Reason Why Amazon.com is Successful

Amazon.com has combined multiple factors to achieve its global acceptance and success. Firstly is that Amazon.com differentiates itself mainly on the basis of price. Besides that, it makes sure that it offers the same quality products as any other company with a noticeably lower price. In addition, sellers do not pay any fees for product listing and it cost nothing until the product is sold.

Secondly, Amazon.com also provides high performance service. It has a straightforward web design and friendly interface. Amazon is fast, reliable and easy to use. Besides that, their shipping is prompt and they often keep their customer up-to-date.

According to Maryam Mohit, Amazon.com's V.P. of Site Development, the key to Amazon.com's success is a strong focus on customer experience, which is infused throughout all levels of the company and includes all aspects of the buying process. The uncomplicated process of selling items allowed many users to be involved in selling.



Finally, the most important factor is the unique shopping experience. Amazon.com offers millions of books, music, and movies, auto parts, toys, electronics, home furnishings, apparel, health and beauty aids, prescription drugs, and groceries. Shoppers can also download books, games, MP3s, and films to their computers or handheld devices, including Amazon's own portable reader, the Kindle. It also provides an array of services and products, such as self-publishing, online advertising, a Web store platform, and a co-branded credit card. Furthermore, Amazon.com allows users to submit reviews to the web page of each product. As part of their review, users may also rate the product on a rating scale from one to five stars.

As a conclusion, Amazon.com is well positioned to maintain a firm grip on its title as the undisputed e-commerce leader.


References:
  1. http://en.wikipedia.org/wiki/Amazon.com
  2. http://www.thebookseller.com/news/74820-amazon-is-uks-third-favourite-retailer.html
  3. http://siteanalytics.compete.com/amazon.com+walmart.com/?metric=uv
  4. http://www.goodexperience.com/blog/archives/000192.php